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Home > Post > As Seen in Development Finance Today "Although uncertainty continues, the appetite for development remains".

As Seen in Development Finance Today "Although uncertainty continues, the appetite for development remains".

After achieving a record-breaking end to 2022, Clearwell Capital’s head of business development Callum Ferguson offers his thoughts on residential property development for the next 12 months.

2022 was a unique year posing unique challenges for the property development industry, from the conflict to Ukraine increasing inflationary pressures on build costs to the turmoil in Downing Street and its effect on rising interest rates. It was a year of constantly shifting landscapes and economic uncertainty.

As the year drew to a close, Housing Secretary, Michael Gove, indicated a wish to scrap housing targets.

The Government has insisted it will maintain its commitment to build 300,000 homes and Housebuilders, in support of the targets have urged the Government to stand firm.

Despite all the economic and real estate turmoil, December 2022 was a record month for Clearwell Capital with committed facilities agreed, providing over £7 million to support three SME property developers across three different schemes.

Clearwell is on target to achieve its 100th loan later this month, indicating appetite for development remains.

Speaking to our clients, it is clear that although uncertainty continues, property developers are keen to continue to develop homes to fill the national shortage.

What we see is there is still a strong appetite from developers and financiers for well-priced, well underwritten developments.

Based on our clients’ positivity, Clearwell has an ambition to continue the strong year we have had.

Our approach to 2023 is one of cautious optimism and alongside this a continued focus on….


Most economists agree that inflation has peaked or is close to peaking and should start to retreat as 2023 progresses. From a development perspective this should mean that construction budgets prepared today have factored in the inflationary pressures of the past 12 months. Undoubtedly there are still pressures on both the labour market and supply chains. It is therefore important that sensible timeframes are set for development by both developers and their lenders.

Mortgage Rates

The infamous ‘mini budget’ of September exacerbated - at the very least - turmoil in the mortgage market bringing the age of cheap money to an abrupt end. Though mortgages will be more expensive in 2023 than we have been used to in recent years, the interest rate volatility we experienced a few months ago has reduced significantly. At the time of writing, two-year fixes are available for around 4.5% and both Halifax and Nationwide are due to reduce their fixed term mortgage rates in the coming days.

House prices

Following the relentless growth in houses prices since the pandemic (some parts of the UK have seen increases of over 20%) the end of last year saw a cooling in the housing market with prices beginning to fall. This trend is likely to continue through 2023 with the ‘froth’ coming off the residential market rather than a full-blown housing crash the most likely scenario. When underwriting new development schemes, it is worth researching comparable sales at 2020 prices as a starting point.

Land Prices

We expect that the factors listed above will cause land (or site) values to drop in the coming year. Acquisition price has always been one of, if not, the key factors to a successful development project and with the housing market now cooling there is little margin for error. Although land prices were slow to reduce at the end of 2022, Clearwell was involved in a couple of transactions where the acquisition price was re-agreed post valuation, indicating that land sellers are taking a pragmatic approach – let’s hope this trend continues in 2023!


The Clearwell team will remain busy this year by focusing on the above external forces so they can support clients in developing the most appropriate financial products for their developments. The majority of developers and housebuilders we work with have two or three schemes in progress and need to know how they can best manage their capital to fulfil their long-term pipeline.

We remain cautious but optimistic that there is plenty of opportunity to build on last year’s successes.

Get in touch with one of our experts to find out how we can help you to secure development finance for your next project. We are industry experts specialised in the development finance sector and are happy to help however we can.

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